Biden minimum wage – everything to know
U.S. President Joe Biden’s minimum wage raise proposal was a big part of his presidential campaign. Before he was inaugurated as the new president, he proposed the minimum wage to be doubled or more. This was met with mixed reactions from economists and business owners. Workers were glad to hear the news, especially after the past year’s challenges because of the pandemic.
Now that he’s officially the 46th President of the United States, he has pushed for the Executive Order to be signed and implemented. How this will affect the economy of not just the country but the global market is yet to be seen.
The positive news is that if this takes effect nationwide, workers will have more spending power. A raised minimum wage can raise many people out of poverty. Read on to know more about President Biden’s minimum wage.
The minimum wage in the United States
Since 2009, the federal minimum wage has been $7.25 an hour. It varies per state because state government units have slowly increased their wage floor, but this is the mandated minimum on the federal level. The inflation in tax, housing, food, and just about everything else money can buy has been exponential since 2009. This more-than-10-year-old minimum wage floor is decidedly not enough for many households.
While many states have raised their wage to $13 an hour, they are also most likely tax higher than anywhere else. Some states have not adopted the federal minimum wage and pay less than $7.25 an hour. Many states also have minimum wage laws that employers have to follow. The Department of Labor’s Wage and Hour Division is tasked to administer and enforce the federal minimum wage law.
Biden’s proposed $15 minimum wage
U.S. President Joe Biden replaces the cap on his pen as he signs the “Paycheck Protection Program (PPP) Extension Act of 2021” into law in the Oval Office at the White House in Washington, U.S., March 30, 2021. REUTERS/Jonathan Ernst/File Photo
Last April 27th, the official White House website announced that President Biden signed an executive order regarding raising the federal minimum wage. The new $15 wage floor requires federal contractors to pay the required minimum wage to workers on federal contracts. These include essential workers such as healthcare workers, cleaning professionals, maintenance workers, cafeteria and other food workers, and other labor force members.
The Biden administration has the full support of many Democratic allies in Congress and the general public with this decision. They believe that raising the minimum wage within four years after the executive order has been signed into law will improve the lives of millions of Americans.
The first increase to $9.50 would take effect on the day the law takes effect. Annual increases will happen until the $15 wage floor is achieved. Democratic parties also proposed the gradual elimination of subminimum wages for the thousands of workers whose tips are included in the calculations of their wages.
Benefits of a higher federal wage
There are decidedly many benefits to an increased minimum wage. For workers with families living in middle-class standards, the previous wage floor was barely enough to get by.
Everyone deserves a livable wage. One where you won’t have to worry about where your children’s next meal will come from. People who work full-time and still live in poverty deserve better. With this executive order, both employers and employees should experience benefits. Some of these benefits include:
- Economic security — Families that have experienced decades of income inequality based on their race, educational background, and other factors could ensure a better future for the younger generations.
- Domino effect for other competitors in the same market — Raising the federal minimum wage will make competing companies in the same line of work implement the higher wage. Especially, if they want to keep their workers or hire some in the future.
- Less turnover rate and improved quality of work — When people are compensated justly, the quality of their work improves. There are also fewer chances of employees quitting when paid livable wages with other benefits and compensation.
- Ensure a $15 minimum wage for federal contract workers with disabilities — Requiring federal contract workers with disabilities to work and earn the same as regular workers will lessen wage disparity. This will then open up more opportunities for differently-abled people.
- Tipped workers will receive a fixed minimum wage — Labor laws state that an employer can pay a tipped employee not less than $2.13 an hour in direct wages. This is if that amount plus their tips equals the previous minimum wage of $7.25. This means that a tipped worker’s pay depends on customers’ tips. Also, it does not ensure fixed pay, creating an unstable financial status. Including them in this law will benefit these workers.
Does the federal minimum wage increase apply to everyone?
The federal minimum wage increase applies to companies that incur an annual income or gross sales volume amounting to at least $500,000. It also applies to workers in the field of interstate communications, such as transportation or the production of goods.
Essential workers for interstate activities are also of entitlement to this. Other labor workers such as federal, state, or local government agencies, hospitals, schools, and domestic workers are also in. There are several workers of exempt from the minimum wage, but this mainly depends on your state laws.
What happens when the minimum wage is increased?
While many argue that raising the minimum wage could cost jobs, as many companies may opt to lay off workers, this isn’t the case. According to the Organization for Economic Cooperation and Development (OECD), there is evidence that raising the current minimum wage has little to no impact on the country’s employment rate. The increase will have more positive impacts than negative ones. The increased minimum wage to 15 dollars would incentivize employees to stay longer in their line of work. This will then significantly decrease salary inequalities.
A raised salary would also mean increased annual income. With this, families and individuals can slowly recover from student loans or huge mortgages and keep up with the market’s price inflation.
Increased wages and spending power means an increase in demands and employment. Reduced turnover for businesses also means less cost for hiring and training new employees. All in all, if this EO gets signed into law by Congress, the economy will see a huge change.
Summary
Whether you live in a state that already more or less implements the new wage floor, a livable wage should be demanded for everyone’s sake. No one deserves to live in poverty despite working 40 or more hours per week. Everyone deserves fair compensation for the work they render to their employers and their company.
Not only will an increase in salary boost morale, but it will also give business employees who do top-quality work and loyalty to their work. With the Executive Order well under its way, there may be backlash from business owners. However, there is sufficient evidence that proves this is the right move for the economy.
